Penn National sells its Strip casino as a result of the coronavirus
The casino operator sells Tropicana to the Gaming & Leisure Properties REIT
In times of financial crisis, even the biggest companies have had to change the course of things and make tough decisions for the sake of the business. Last Friday, Penn National Gaming announced the sale of one of its two Las Vegas casino properties, so it can bring some relief to the economic pain that the global coronavirus pandemic has created. Penn National has sold its only Las Vegas Strip venue, The Tropicana Las Vegas, to real estate investment trust (REIT) Gaming & Leisure Properties in a lease and lease-back deal.
Tropicana Las Vegas casino will continue to operate normally – of course, when casinos are back on business. The REIT was created as a spinoff from Penn National in 2013, and this lease-back strategy seemed very similar to the one applied by MGM Resorts International when the company sold several of its properties all throughout last year and part of this one. This “asset-light strategy” means that MGM sells the estate, but leases it back, allowing it to continue operating the venues without changes other than the property having a new owner.
Gaming & Leisure Properties bought Tropicana for $337.5 million, but payable in non-cash rent payments. What it means is that Penn National won’t need to pay rent until those credits expired. Part of this deal also includes a ground lease in which there are plans to develop a new casino in Pennsylvania, as well as the possibility of Penn National to purchase a Maryland casino from the same company.